HC Deb 26 March 1830 vol 23 cc923-31

On the Motion of the Chancellor of the Exchequer, the House resolved itself into a Committee of the 4-per-eent Annuity Acts.

The right hon. Gentleman, when in committee, said, that though the measure he was "about to bring under the consideration of Parliament was, in a financial point of view, of great importance, it would not be necessary for him, in explaining its bearings, to trespass at any length on the attention of the Committee. His object was, to relieve the public burthens, by a reduction of a portion of the public debt. The principle of such a measure was one which needed not in that House any argument by way of justification; for it had been stated by Ministers, long before Mr. Pitt's time, and admitted by those who succeeded him in the management of the finances of the country, that it was the duty of Ministers to take advantage of every opportunity which the state of the public credit afforded of reducing the amount of the national burthens. This principle had been asserted by Mr. Pitt, and would no doubt have been acted upon by him, but for the eventful war, the extent, duration, and consequences of which, it was impossible for him to foresee. It was, however, as he had stated, always kept in view by those who had succeeded him in office, and, since the peace, had been carried into practice by them to the extent of relieving the public burthens annually of about 2,000,000l. The period had now arrived for effecting a still further reduction of those burthens, and accordingly he thought it his duty to take advantage of the first fair opportunity for availing himself of it. He proposed, therefore, to effect a further reduction, by the conversion of the new 4-per-cent annuities into a new 3½-per-cent stock. The circumstances of the country were highly favourable to such a conversion, as a moment's consideration of the rate of interest in the money-market, and of the quantity of capital seeking for a profitable outlay, would convince any hon. Member. Capital to a large amount was laid out on mortgages at 4-per-cent interest, and was now offered, within his own knowledge, for 3½-per-cent. When this fact was taken into consideration, and when the peculiar advantages which an investment in the public funds afforded were also borne in mind, the House he was sure would not for a moment refuse its sanction to a conversion of the 4 to 3½-per-cent stock. It could not be objected that the measure would operate as a breach of contract explicit or implied; for the Act under which the new 4-per-cent annuities were created explicitly stated that that rate would be guaranteed for but seven years—that is, that the Act would be in force for only that period; Government being left at liberty, at the expiration of that term, to act towards the holders of that stock as might appear advantageous to the public. Those seven years had expired, for the Act was passed in 1822, and Ministers deemed it their duty to effect the proposed conversion. He felt, therefore, that no further argument was necessary, so far as the principle of his intended measure was concerned. The only question, then, for the Committee was, what were the terms on which he meant to effect the reduction? Those terms would, he persuaded himself, be found conducive to the public advantage. He proposed to give every holder of 100l. of the 4-per-cents, created by the Act of 1822, who should not signify his dissent, 100l. of a new 3½-per-cent stock, and that 3½-percent interest he would guarantee for ten years. He gave this guarantee for so long a period, because he thought that the inducement would be stronger to consent to the conversion he proposed, and he was anxious, on account of its advantages, to make it as extensive as possible. The price at present in the market of the stock he proposed to give was 99½-per-cent exclusive of interest, so that 100l. at 3½ was a fair valuation. To those who should express a dissent from these terms, he would give an option of subscribing to a new 5-per-cent stock, not redeemable until the 5th of January, 1873, each holder of 4-per-cents to receive 70l. of the 5-percent stock for his 100l. It might be asked, perhaps, why he had not preferred converting all the 4-per-cents into this 5-percent 70l. forty-two years stock, as there would accrue a great consequent saving to the public? The answer to the question was contained in the fact, that at least 2–5ths of the holders of the 4-per-cents were trustees of the property of others—that is, persons responsible for the management of property not their own; so that if they were compelled, without option, to take in lieu of every 100l. 4-per-cents, 70l. 5-per-cents, Parliament would be neither more nor less than legalizing an immoral act, by which, for the sake of temporary advantage, a large amount of trustee property might be deteriorated one-third. It might also be asked why forty-two years had been fixed upon for the intended 5-per-cent 70l. stock, instead of that recommended in a pamphlet, in which the subject had been minutely investigated. [The right hon. Gentleman alluded to Mr. Brickwood's pamphlet.] In answer he could say, that it appeared in calculation, that all things considered, 70l. at 5-per-cent for forty-two years, was equal to 100l. at 3½-per-cent ensured for ten years: and that if the recommendation of the pamphlet had been acted upon, 18,000,000l. capital would be sacrificed for 229,000l. per annum; and for a 3s. reduction of present interest, the possibility of a reduction of 10s. in a few years. With this brief explanation of his plan he should proceed to move the Resolutions on which he would found his Bill. He would be happy to afford any hon. Member every further information in his power. He counted on the sanction of the Committee to a Resolution by which the public would save next year 778,000l., and that, too, without at all impairing the means of public credit: on the contrary, its effect would be to add to those means, and thereby to the character and resources of the country. The right hon. Gentleman concluded by moving the following Resolutions:— 1. That all and every person and persons, bodies politic and corporate, who now is or are, or hereafter may be, interested in, or entitled unto, any part of the National Debt redeemable by law, which now carries an interest after the rate of 4l. per Centum per annum, and is usually known by the name of ' New 4l. per Cents,' and which were created in the year 1822, payable at the Bank of England, and payable at the Bank of Ireland, and who shall not signify his, her, or their dissent, in the manner hereinafter mentioned, shall, in lieu of every 100l. of such New 4l. per Centum Annuities, receive and be entitled to the sum of 100l. in a new stock, to be called the ' New 3½ per Centum Annuities,' and to carry an interest after the rate of 3l. 10s. per centum per annum, and so in proportion for any greater or less amount of such 4 per Centum Annuities; and that the dividends on the said 3l. 10s. per Centum Annuities shall be payable half-yearly at the Bank of England, and at the Bank of Ireland, upon the 5th day of January and the 5th day of July in each and every year; and the first half-yearly dividend on the said New Sl. 10s. per Centum Annuities shall be payable on the 5th day of January, 1831; and that the said New 3l. 10s. per Centum Annuities shall not be liable to be paid off until the 5th day of January, 1840. 2. That the interest and dividends payable in respect of the said New 3l. 10s. per Centum Annuities, shall be charged and chargeable upon the Consolidated Fund of the United Kingdom of Great Britain and Ireland, in the same manner as the interest and dividends of the New 4l. per Centum Annuities now stand charged on the said fund. 3. That all and every person and persons, bodies politic or corporate, who shall not, within the period commencing on Monday, the 5th day of April, and ending on Saturday, the 24th day of April, 1830, "both days inclusive, signify his, her, or their dissent from accepting and receiving a share in the said New 3l. 10s. per Centum Annuities, in lieu of his, her, or their respective shares in the said New 4l. per Centum Annuities, in the manner hereinafter directed, shall be deemed and taken to have consented to accept and receive the same: Provided always, that if any proprietor or proprietors of New 4l. per Centum Annuities, shall not be within the limits of the United Kingdom at any time between the 23rd day of March and the 24th day of April, 1830, but shall be in any other part of Europe, it shall be lawful for such proprietor or proprietors to signify such dissent at any time before the 1st day of July, 1830; and if any such proprietor or proprietors shall not at any time between the 23rd day of March, 1830, and the 1st day of July, 1830, be within any part of Europe, it shall be lawful for him, her, or them, to signify such dissent at any time before the 1st of April, 1831, such proprietor or proprietors proving to the satisfaction of the Governor and Directors of the Bank of England, or any two or more of them, his, her, or their absence from the United Kingdom, or out of Europe, as above specified, and that his, her, or their share or shares of such New 4l. per Centum Annuities, stood in his, her, or their name or names, respectively, on the 23rd day of March, 1830, in the books of the Governor and Company of the Bank of England. Provided that such proprietor or proprietors so absent from the United Kingdom, or out of Europe, shall signify such his, her, or their dissent within ten days after his, her, or their return to the United Kingdom. 4. That all and every person and persons, bodies politic and corporate, who shall not, within the periods respectively specified, have signified his, her, or their dissent from accepting and receiving a share in the said New 3l. 10s. per Centum Annuties, in lieu of his, her, or their respective shares in the said New 4l. per Centum Annuities, shall be entitled, if he, she, or they shall think fit, to subscribe to a New 5l. per Centum Stock, and receive, in lieu of every 100l. of New 4l. per Centum Annuities, 70l. of such New 5l. per Centum Annuities, to carry an interest after the rate of 5l. per centum per annum, and so in proportion for any greater or less amount of such New 4l. per Centum Annuities; and that the dividends on such New 5l. per Centum Annuities shall be pay- able half-yearly at the Bank of England, and at the Bank of Ireland, upon the 5th day of January and 5th day of July in each and every year; and the first half-yearly dividend on the said New 5l. per Centum Annuities, shall be payable on the 5th day of January, 1831; and that the said New 5l. per Centum Annuities shall not be liable to be paid off until after the 5th day of January, 1873;—Provided that every person or persons, bodies politic or corporate, desirous of subscribing to such New 5l. per Centum Annuities, shall, within one month after the period fixed for signifying his, her, or their dissent, make known his, her, or their intention to subscribe to the 5l. per Centum Annuities upon the aforesaid terms, and shall have his, her, or their names inserted in a book or books to be kept at the Bank of England for that purpose. 5. That provision shall be made for paying off such proprietor or proprietors of the said New 4l. per Centum Annuities, as shall signify his, her, or their dissent from accepting and receiving any share in the said New 3l. 10s. per Centum Annuities, or the said 5l. per Centum Annuities, in lieu thereof. 6. That all persons, bodies politic and corporate, possessed of any part of the said New 4l. per Centum Annuities, and who shall desire to signify such dissent as aforesaid, shall, between the 5th and 24th days of April, 1830, both inclusive, by themselves or some agent or agents for that purpose duly authorized, signify to the Governor and Company of the Bank of England, such dissent in writing under his, her, or their hand or hands, together with the amount of his, her, or their respective shares in the said New 4l. per Centum Annuities, and which said dissent shall be entered in a book or books to be opened and kept by the said Governor and Company for that purpose, and numbered in the order in which his, her, or their dissent shall be received by the said Governor and Company; and in case of any transfer of such shares, or any part or parts thereof after such dissent, the part or parts so transferred shall be entered in the said books under the same numbers as were fixed to such shares when the dissent was so signified; and every such dissentient proprietor or proprietors, or his, her, or their assigns, under any such transfer, shall be paid oil" in such order, and at such periods, and in such manner, as Parliament may direct. 7. That every proprietor or proprietors of the New 4l. per Cent Annuities aforesaid, shall receive the dividends due thereon, on the 5th day of July, 1830; and that every proprietor or proprietors of New 4l. per Centum Annuities, payable at the Bank of Ireland, shall receive the dividend due thereupon up to the same day, and the said New 4l. per Centum Annuities shall be paid off, or converted into New 3½ per Centum Annuities, or 5l. per Centum Annuities, in manner aforesaid, from and after the 5th day of July, 1830, and no transfer of the said New 4l. per Centum Annuities, payable in 'Ireland, to or from the books of the Governor and Company of the Bank of England, or to and from the books of the Governor and Company of the Bank of Ireland, shall take place from and after the 23rd day of March, 1830. 8. That all executors, administrators, guardians, and trustees, may signify such dissent in respect of such shares of the said New 4l. per Centum Annuities, for the holding of which their names are made use of respectively; and all executors, administrators, guardians, and trustees, not signifying such dissent, shall be deemed to have assented as aforesaid, and shall be indemnified in respect thereof.

Mr. Bernal

, on the Question having been put, said, as the greater part of the 4-per-cents were trust funds, he hoped the mode adopted of securing the transfers would be such as would equalize the payments and satisfy the parties for whom the funds were held in trust. He was anxious also to know by what plan the dissentients were to be paid off, because that ought to be ascertained before the House were called upon to provide for the necessary amount. Was it to be by Exchequer Bills?

The Chancellor of the Exchequer

said, in reply, that it would be inexpedient for the Government prematurely to disclose its plan. He hoped it would be enough for his hon. friend to know, that the intended mode of proceeding would be what became the country to pursue in fairness and justice to the public creditor, while the interest of the public was not neglected.

Mr. P. Thomson

said, it was of great importance to ascertain how the dissentients were to be paid, and he should therefore beg leave to repeat the question already put by his hon. friend.

The Chancellor of the Exchequer

could give no further satisfaction. It was necessary to know the number of dissentients, and the amount required to satisfy them before any plan could be adopted. If it were done by way of annuity, an interest corresponding to the eventual reduction of capital, and the rate of the market, would be given.

Mr. Bernal

was persuaded that his right hon. friend meant to do justice, but must press upon him the necessity of making his plan known as early as possible.

Mr. Hume

pressed earnestly upon the Chancellor of the Exchequer to state, in justice to the stockholders of the 4-per-cents, what his mode of proceeding would be, to enable them to have proper time to decide whether they would accept his new stock, or take their money. He ought also to say how he meant to provide for the dissentients, because it was essential for the public to know how far the Bank of England was to be engaged in the transaction, considering the heavy liabilities to which that corporation were already exposed. These two points of information he hoped the right hon. Gentleman would take an early opportunity of giving.

Mr. Robinson

was quite convinced that the project of the Chancellor of the Exchequer was practicable, but he thought the fullest information ought to be given to all the parties concerned.

Lord Althorp

said, he too was anxious for information, though he was bound to say that the main object of the Chancellor of the Exchequer had his entire approbation. He wished, on that occasion, to call the right hon. Gentleman's attention to the propriety of converting all the permanent into terminable annuities, because we had the means of doing so; and that would, at no distant period, put an end to the public debt. The plan should be, to effect the conversion at the market rate of interest, but he would induce the parties concerned to come into the measure by giving them a bonus. The plan had been strongly recommended by the Finance Committee, and since then he believed about 2,300,000l. stock had been so converted. The plan subjected the country to an additional charge for interest, but he did not think that a valid reason for not carrying it into effect. At present, the amount of surplus revenue for any quarter was determined by the sum actually paid into the Treasury during the four preceding quarters, and one fourth of the excess of that over the expenditure for the corresponding period was held to be the disposable surplus for the next quarter, and was placed in the hands of the commissioners for the redemption of the National Debt. If the surplus were 500,000l. they might employ it either in purchasing stock or in effecting the conversion of permanent into terminable annuities, as recommended by Mr. Finlayson. If they purchased stock, supposing them to buy 3-per-cents at par, the 500,000l. would extinguish less debt than if employed in inducing persons, by giving them a rea- sonable bonus, to convert permanent into terminable annuities. This plan, which had been recommended by Mr. Finlayson, appeared to him the best which had yet been suggested for the gradual extinction of the debt, and therefore he wished to press it on the consideration of the Chancellor of the Exchequer.

The Chancellor of the Exchequer

said, he was anxious to give any reasonable proposition a fair trial, but he did not like to pledge himself hastily. The calculations on which such schemes were founded assumed certain facts as data which were not always correct. Although he had been with the noble Lord at that University where calculation was much studied, he confessed that he had not yet mastered Mr. Finlayson's plan; but supposing, when he had mastered it, that he should find it promising, he would give it a fair trial. He had certainly, at one time, supposed that the annuity scheme would not be popular. Experience, however, had convinced him that he had made a mistake. Being aware that the proposed plan would, if founded on correct data, lessen the capital of the debt in a few years, he would certainly take the subject into his consideration.

Mr. Maberly

expressed his satisfaction th Mr. Brickwood's plan was to be tried.

The Resolutions in furtherance of the Chancellor of the Exchequer's proposition were then put, and agreed to.—To be reported on Monday next.